Riaz Haq writes this data-driven blog to provide information, express his opinions and make comments on many topics. Subjects include personal activities, education, South Asia, South Asian community, regional and international affairs and US politics to financial markets. For investors interested in South Asia, Riaz has another blog called South Asia Investor at http://www.southasiainvestor.com and a YouTube video channel https://www.youtube.com/channel/UCkrIDyFbC9N9evXYb9cA_gQ

Thursday, October 27, 2011

Pakistan has the world’s sixth largest population, seventh largest diaspora and the ninth largest labor force. With rapidly declining fertility and aging populations in the industrialized world, Pakistan's growing talent pool is likely to play a much bigger role to satisfy global demand for workers in the 21st century and contribute to the well-being of Pakistan as well as other parts of the world.

With half the population below 20 years and 60 per cent below 30 years, Pakistan is well-positioned to reap what is often described as "demographic dividend", with its workforce growing at a faster rate than total population. This trend is estimated to accelerate over several decades. Contrary to the oft-repeated talk of doom and gloom, average Pakistanis are now taking education more seriously than ever. Youth literacy is about 70% and growing, and young people are spending more time in schools and colleges to graduate at higher rates than their Indian counterparts in 15+ age group, according to a report on educational achievement by Harvard University researchers Robert Barro and Jong-Wha Lee. Vocational training is also getting increased focus since 2006 under National Vocational Training Commission (NAVTEC) with help from Germany, Japan, South Korea and the Netherlands.

With rising urban middle class, there is substantial and growing demand in Pakistan from students, parents and employers for private quality higher education along with a willingness and capacity to pay relatively high tuition and fees, according to the findings of Austrade, an Australian govt agency promoting trade. Private institutions are seeking affiliations with universities abroad to ensure they offer information and training that is of international standards.

Trans-national education (TNE) is a growing market in Pakistan and recent data shows evidence of over 40 such programs running successfully in affiliation with British universities at undergraduate and graduate level, according to The British Council. Overall, the UK takes about 65 per cent of the TNE market in Pakistan.

It is extremely important for Pakistan's public policy makers and the nation's private sector to fully appreciate the expected demographic dividend as a great opportunity. The best way for them to demonstrate it is to push a pro-youth agenda of education, skills development, health and fitness to take full advantage of this tremendous opportunity. Failure to do so would be a missed opportunity that could be extremely costly for Pakistan and the rest of the world.

Monday, October 24, 2011

High-speed broadband expansion led by PTCL has propelled Pakistan to become the fourth fastest growing broadband market in the world and the second fastest in Asia, according to a recent industry report. Serbia leads all countries surveyed with a 68% annual growth rate from Q1 2010 to Q1 2011. Thailand (67%), Belarus (50%), Pakistan (46%), and Jordan (44%) follow Serbia. India is in 14th place worldwide with a 35% annual growth rate.

Leading the charge is PTCL (Pakistan Telecommunications Ltd.), Pakistan's state-owned telecommunications company, which recently launched 100 Mbps fiber to the home broadband service using Gigabit Passive Optical Network (GPON) technology. Earlier this year PTCL rolled out bonded VDSL2 technology to deliver 50 Mbps to its existing DSL customers, five times the top speed of the nation's highest level of service at the time, at a construction cost of just $200-300 per home passed.

Nearly 200,000 new subscribers signed up for broadband from the end of Feb to the end of May. At the end of May 2011, Pakistan had 1.4 million broadband subscribers, up from 1.2 million in February, according to figures from Pakistan Telecommunication Authority (PTA). The number of DSL subscribers rose to 654,000 compared with 595,038 in Feb, while the number of Wimax internet users stood at 397,155, up from 338,962 Wimax users in February. Some 294,161 people connected to the internet via EV-DO, up from 234,113 in Feb, and 42,490 people used HFC (Hybrid Fiber Coax, or cable) to access the internet, compared with 43,193 HFC users in February. Fiber is growing as well, and there were 6,222 FTTH users in March, up from 5,818 in Feb, and 1,873 broadband subscribers used other technologies.

PTCL has recently launched an Android based thin Apple iPAD2 like tablet computer with EVO 3G and WiFi connectivity built-in. 3G EVO Tab is a 7 inch touch screen tablet with built-in EVO service to offer wireless broadband internet on the go in more than 100 cities and towns across Pakistan. Powered by Google Android Froyo 2.2 Operating system, 3G EVO Tab offers support for both 3G and Wi-Fi for an un-interrupted on-the-go connectivity. With a 5 MegaPixel Camera, a variety of built-in applications, 3G EVO Tab lets users browse, snap, share, communicate, navigate, play games and do a lot more on-the go, thereby making it an ideal connectivity solution for users looking for high speed on-the-go 3G connectivity on an Android platform. PTCL 3G EVO Tab offers convenience and speed with three diverse economy packages to suit individual needs and pockets. Its 12-month bundle offer has been very successful with majority sales in this bracket.Customers can get EVO Tab for as low as Rs 7,999 plus 12-month unlimited EVO service, all at Rs 31,999. In addition to the 12-month contract, EVO Tab offers bundled packages based on 3 and 6 month contracts at Rs 27,999 and Rs 29,999, respectively with 3 and 6 month of unlimited EVO service.

Growing broadband and Internet access by itself is of no value. However, such capabilities can enable huge opportunities for education, communication, business and entertainment. Take distance learning as an example. The quickest and the most cost-effective way to broaden access to education at all levels is through online schools, colleges and universities. Sitting at home in Pakistan, self-motivated learners can watch classroom lectures at world's top universities including UC Berkeley, MIT and Stanford. More Pakistanis can pursue advanced degrees by enrolling and attending the country's Virtual University that offers instructions to thousands of enrolled students via its website, video streaming and Youtube and television channels.

There are many online learning channels, like the Khan Academy, which help advance learning at secondary and tertiary levels. For those interested in vocational training and specialized work-related skills, there are plenty of Youtube channels and videos which are becoming accessible with increasing bandwidth of connections available to people at their homes, schools and offices.

In summary, I believe that the growing bandwidth available for the Internet users in Pakistan, with all its great applications for learning, work and play, is good news for the future of Pakistan. It will open a whole new world of opportunities for the nation's youth and ultimately produce significant demographic dividend.

Friday, October 21, 2011

Although the growth in the total number Pakistanis studying abroad has slowed since the terrorist attacks of Sept 11, 2001 in the United States, the world's sixth most populous nation continues to be among the leading sources of foreign students in America, Europe, Australia and new emerging higher education destinations in Asia.

As the number of Pakistani students in the United States has declined from a peak of 8,644 students (ranked 13th) in 2001-02 to 5,222 in 2009-10 (ranked 23rd), English-speaking OECD nations of the United Kingdom and Australia have become the biggest beneficiaries getting increasing market share of the Pakistan education market. Both nations have benefited in spite of the fact that the UK and Australian visa rejection rates for Pakistanis are higher than for students from other nations.

A recent British Council report says that 9,815 Pakistani students (Source: HESA) put Pakistan among one of the top six countries which account for 54 percent of the UK’s (non-EU) international students. Since September 2001, it has become the market leader, a place previously held by the US. In addition to Canada in North America, several Northern European countries, including Sweden and Finland, have also become quite active in marketing their education in Pakistan. As a result, these nations are attracting thousands of Pakistani students to their universities.

There is also an upward trend in Pakistani students studying in Australia. 8,458 Pakistani students studied in Australia in 2009/2010, increase of 11/4% over 2008/2009 (Source: AEI).

The US is beginning to pick up more of the Pakistani education market share after a significant decline since 911, with its simplified visa procedures and increased marketing efforts, and the excellent scholarship opportunities that they have to offer Pakistani students. Pakistan now has the world's largest Fulbright Scholarship Program with over 200 scholarships offered to Pakistani students for advanced degrees in 2011.

Beyond the traditional destinations in OECD nations, newly industrialized countries such as Thailand, Malaysia and Singapore are more visible in Pakistan and perceived as offering quality education at lower prices.

Pakistanis take education seriously. They spend more time in schools and colleges and graduate at a higher rates than their Indian counterparts in 15+ age group, according to a report on educational achievement by Harvard University researchers Robert Barro and Jong-Wha Lee.

With rising urban middle class, there is substantial and growing demand in Pakistan from students, parents and employers for private quality higher education along with a willingness and capacity to pay relatively high tuition and fees, according to the findings of Austrade, an Australian govt agency promoting trade. Private institutions are seeking affiliations with universities abroad to ensure they offer information and training that is of international standards.

Trans-national education (TNE) is a growing market in Pakistan and recent data shows evidence of over 40 such programs running successfully in affiliation with British universities at undergraduate and graduate level, according to The British Council. Overall, the UK takes about 65 per cent of the TNE market in Pakistan.

Wednesday, October 19, 2011

The Punjab government led by PML's Shahbaz Sharif spurned 20 billion rupees ($232.55 million) in US aid slated for welfare projects in Pakistan's most populous province in the next three years, according to a report in Dawn newspaper. The popular move was motivated by politics to capitalize on a wave of anti-American anger following the US raid that killed Osama Bin Laden in Abbottabad, Pakistan.

While the amount of aid rejected is relatively small, the decision's outsized impact on the poor is now coming to light. Here are some of the projects most impacted:

1. U.S. aid could have transformed Punjab Government's Lady Willingdon Hospital in Lahore, where rats run through the halls, patients sleep three to a bed, women who require C-sections aren't getting them because only one operating room is functioning, and premature babies risk death because of a shortage of incubators, according to the Associated Press.

The hospital struggles to provide even basic care. Built by the British in the 1930s before Pakistan's independence, it was meant for 80 patients. The country's population has since exploded, forcing officials to cram 235 patients into a facility that is now run-down. Paint peels off the concrete walls and black mold covers the ceilings. Patients are forced to share beds, and sometimes women who are close to giving birth have to sit on the floor for lack of space. It has only one functioning operating room, leaving women lined up to receive cesarean sections.

The hospital has only three working infant incubators, which were donated by NGOs. The hospital is forced to use overhead warmers for other infants, leaving them more exposed to disease. The $16 million offered by the U.S. would have been used to purchase 10 incubators, build a new 100-bed ward and expand the nursery and emergency facilities.

2. Another $100 million of US aid was to be used to rebuild schools in southern Punjab province that were destroyed by last year's devastating floods. An additional $10 million was meant to improve municipal services like clean water and sanitation.

3. The loss of aid for Shamaspura, a poor neighborhood in Lahore, means that its 15,000 residents will not get their only road paved, nor will they get a new sewer system.

Batool Akhtar, a poor but feisty woman quoted by the AP story, summed it up well when she said: "This is rich people denying aid meant for the poor. The government should have taken the money."

Pakistan runs chronic budget deficits of around 5% of its GDP, and its government collects less than 10% of GDP in tax revenue which is among the lowest in the world. A big share of these deficits is funded by foreign aid and loans, making Pakistanis beholden to the interests and whims of major foreign donors and lenders.

Pakistan's tax policies are among the most regressive in the world. Direct taxes make up less than 3.5 percent of GDP, with wide ranging exemptions to powerful segments of society coupled with governance issues at Federal Board of Revenue, according to former finance minister Shaukat Tarin. The bulk of the tax receipts are collected in the form of sales tax, placing the heaviest burden on the lower-income people who spend almost all of their income on their basic needs.

Given the unwillingness of Pakistan's ruling elite to pay more in taxes, I agree with the decision of the other three provincial governments to continue to accept US economic aid. As the Punjab examples above show, refusing such aid clearly hurts the poor the most.

Pakistan would be well advised to not seek confrontation with Washington. Why? The reason is simply that the United States is the architect and the unquestioned leader of the international order that emerged after the WW II and this system still remains largely intact. Not only is the US currency the main reserve and trade currency of the world, the US also dominates world institutions like the UN and its agencies, the World Bank, the International Monetary Fund (IMF) and the World Trade Organization (WTO).

All foreign aid, regardless of its source, comes with strings attached. And those in Pakistan who think that China, undoubtedly a rapidly rising power, can replace US as a powerful friend in helping Pakistan now are deluding themselves. Today, China's power and influence in the world are not at all comparable to the dominant role of the United States. Chinese currency is neither a trade nor a reserve currency. Chinese themselves depended on the US agreement to be allowed to join the WTO after accepting terms essentially dictated by the United States in a bilateral agreement. Most of China's trade is still with the United States and its European allies. And the Chinese military power does not extend much beyond its region because it, unlike the United States, lacks the means to project it in other parts of the world.

Rather than alienate the United States and risk being subjected to international isolation and crippling sanctions like North Korea (a Chinese ally), Pakistanis must swallow their pride now and choose better ways of becoming more self-reliant in the long run.

Here are some of my recommendations for Pakistanis to move toward greater self-reliance:

1. They must all pay their fair share of taxes to reduce dependence on foreign aid and loans.

2. They must spend more on education and heath care and human development to develop the workforce for the 21st century.

4. They must develop industries and offer higher value products and services for exports to earn the US dollars and Euros to buy what they need from the world without getting into debt as the Chinese have done.

No amount of empty rhetoric of the "ghairat brigade" can get Pakistanis to reclaim their pride unless they do the hard work as suggested above.

Tuesday, October 18, 2011

After a reportedly successful US-Israeli stux-net cyber attack on Iranian nuclear installations last year, there is now a report in the New York Times that the Obama administration has considered deploying cyber warfare against Pakistan as well.

The New York Times quotes unnamed US officials as acknowledging that the US "military planners suggested a far narrower computer-network attack to prevent Pakistani radars from spotting helicopters carrying Navy Seal commandos on the raid that killed Osama bin Laden on May 2." It says the idea of cyber attack on Pakistani air defense system was dropped, and radar-evading Black Hawk helicopters and stealthy RQ-170 Sentinel surveillance drone were instead used to for the raid in the Pakistani town of Abbottabad. The CIA spied on Osama bin Laden’s compound in Pakistan by video transmitted from a new bat-winged stealth drone, the RQ-170 Sentinel, which hovered high above Abbottabad for weeks before the raid. There are speculations that the US might be doing such aerial surveillance in other parts of Pakistan, particularly on Pakistan's nuclear installations.

Recently, officials at Creech Air Force Base in Nevada acknowledged a virus infecting the drone “cockpits” there, according to Wired magazine. The source of the virus has not been identified. Back in 2009, the Wall Street Journal reported that militants in Iraq used $26 off-the-shelf software to intercept live video feeds from U.S. Predator drones, potentially providing them with information they needed to evade or monitor U.S. military operations.

At the 2009 World Economic Forum, the U.S.-based security software firm McAfee's CEO Dave Walt reportedly told some attendees that China, the United States, Russia, Israel and France are among 20 countries locked in a cyberspace arms race and gearing up for possible Internet hostilities. He further said that the traditional defensive stance of government computer infrastructures has shifted in recent years to a more offensive posture aimed at espionage, and deliberate disruption of critical networks in both government and private sectors. Such attacks could disrupt not only command and control for modern weapon systems such as ballistic missiles, but also critical civilian systems including banking, electrical grid, telecommunications, transportation, etc, and bring life to a screeching halt.

In a Sept 2010 report, the Wall Street Journal quoted cyber security specialists saying that "many countries including the U.S., Russia, China, Israel, the U.K., Pakistan, India and North and South Korea have developed sophisticated cyber weapons that can repeatedly penetrate and have the ability to destroy computer networks".

Last year, Chinese hackers apparently succeeded in downloading source code and bugs databases from Google, Adobe and dozens of other high-profile companies using unprecedented tactics that combined encryption, stealth programming and an unknown hole in Internet Explorer, according to new details released by the anti-virus firm McAfee and reported by Wired magazine. These hack attacks were disguised by the use of sophisticated encryption, and targeted at least 34 companies in the technology, financial and defense sectors, exploiting a vulnerability in Adobe’s Reader and Acrobat applications.

While the Chinese cyber attacks on US and India often get wide and deep coverage in the western media, a lower profile, small-scale cyber warfare is also raging in the shadows between India and Pakistan, according to some reports. These reports indicate that around 40-50 Indian sites are being attacked by Pakistani hackers on a daily basis whereas around 10 Pakistani sites are being hit by their Indian counterparts.

Here is how Robert X. Cringeley described the potential effects of full-scale India-Pakistan cyber war in a June 2009 blog post captioned "Collateral Damage":

"Forget for the moment about data incursions within the DC beltway, what happens when Pakistan takes down the Internet in India? Here we have technologically sophisticated regional rivals who have gone to war periodically for six decades. There will be more wars between these two. And to think that Pakistan or India are incapable or unlikely to take such action against the Internet is simply naive. The next time these two nations fight YOU KNOW there will be a cyber component to that war.

And with what effect on the U.S.? It will go far beyond nuking customer support for nearly every bank and PC company, though that’s sure to happen. A strategic component of any such attack would be to hobble tech services in both economies by destroying source code repositories. And an interesting aspect of destroying such repositories — in Third World countries OR in the U.S. — is that the logical bet is to destroy them all without regard to what they contain, which for the most part negates any effort to obscure those contents."

Coming back to the US, it is no secret that the Pentagon and the CIA have increasingly been using America's significant technology edge for war fighting in many parts of the world in recent years. One example is the growing fleet of the remotely controlled stealthy drones being deployed in Afghanistan, Pakistan, Iraq, Yemen and elsewhere for espionage and attacks. Among other new developments, the modern drone is just one of the ways to fight wars covertly in remote places at low cost to America in terms of dollars and casualties, often without so munch as declaring such wars.

The Pentagon now has some 7,000 UAVs, compared with fewer 50 just 10 years ago. The US Air Force is now anticipating a decrease in manned aircraft but expects its number of “multirole” aerial drones like the Reaper — the ones that spy as well as strike — to nearly quadruple, to 536, according to NY Times. Already the Air Force is training more remote pilots, 350 this year alone, than all of the fighter and bomber pilots combined.

The covert nature of drone warfare is particularly true outside Afghanistan and Iraq which are declared wars. In Pakistan, for instance, the secret war is being fought by the CIA, an intelligence agency, not the American military. This war is not even publicly acknowledged by the US administration, and it's a clear violation of international laws and all conventions of war.

The US politicians, spies and generals seem to be calculating that the American people would be more willing to support such wars if they don't bust the US budget and result in as few American body bags as possible. However, this calculation ignores the basic fact that most international conflicts, including terrorism, are essentially political in nature, and must be solved by political rather than the military means.

Among other South Asian nations, India's GHI score improved to 23.7 in 2011 to where it was in three years earlier in 2008 after worsening from 23.7 (2008) to 23.9 (2009) to 24.1 (2010). India's ranking remained at 67 in 2011, the same as it was in 2010 but worse than 66 in 2008 and 65 in 2009.

Since taking the reins of power more than three years ago, the coalition government in Islamabad, which is led by the Pakistan Peoples' Party, has been increasing the support prices of wheat and other agricultural commodities every year, a policy at least partly driven by politics of patronage to enrich the PPP's rural landowning constituency.

In 2008, the current government pushed the procurement price of wheat up from Rs. 625 per 40 kg to Rs. 950 per 40 kg. This action immediately triggered inflationary pressures that have continued to persist as food accounts for just over 40% of Pakistan's consumer price index. According to State Bank of Pakistan (SBP) analysis, cumulative price of wheat surged by 120 per cent since 2008, far higher than the 40 per cent between 2003 and 2007. it is also many times greater than the international market price increase of 22 per cent for wheat in the same period. Similarly, sugar prices have surged 184 per cent higher since 2008, compared with 46 per cent increase during 2003-07.

The World Food Program (WFP) officials agree that decline in food security in Pakistan is now an issue of affordability rather than availability. With stagflation and rising unemployment, growing numbers of people simply lack the income to buy sufficient food for themselves and their families, resulting in under-nutrition and growing hunger.

The poster child of the waste, fraud and abuse is the Turkish Karkey rental power ship deal which sinks Rs. 780 million or nearly $9 million per month of public funds for providing very little power because of lack of sufficient fuel supply, according to The News.

What is becoming increasingly clear is that the government's corruption and incompetence in the power sector, not just insufficient installed generating capacity blamed on Musharraf, are at the heart of the deteriorating energy situation in Pakistan.

Nine Independent Power Producers (IPPs), with a combined power generation capacity of 1,800MW, have now notified the government and central power purchasing agency (CPPA) that they are invoking sovereign guarantees for the recovery of their dues amounting to Rs. 31 billion.

In addition to the long delayed structural reforms in the power sector, there is a total lack of will to tackle the widespread problem of power theft and the mounting unpaid electricity bills which account for as much as 40% of the industry revenue. This deprives the crucial sector of the cash it needs to operate as a sustainable and responsive business capable of satisfying its customers' requirements of reliable electricity service. Rather than deal with these underlying issues, the government is choosing to apply the temporary band-aid of uncertain periodic subsidies and repeated rate hikes.

The recent electricity riots and the approaching elections now appear to be having the effect of adding some sense of urgency at the cabinet level to deal with the long festering crisis. The Cabinet Committee on Restructuring (CCoR) on power sector Thursday approved the creation of a holding company to be led by an independent board of directors to finalize the restructuring of four power generation companies (GENCOs).

This holding company will supervise the management of four GENCOs to be managed in the private sector and would try will make sure of fresh investment in such GENCOs to improve power generation from existing 3,500 megawatts (MW) to 4,800 MW in near future to bridge the demand and supply gap, according to a report in Daily Times.

The paper also reported that the PEPCO (Pakistan Electric Power Co) would be dissolved by October 30, 2011 and replaced by CPPA (Central Power Purchasing Agency) with private management would be its successor. A source said that role of the ministries in power sector would be minimized and private sector would have complete administrative and financial authority under the reform process to improve the system.

It's absolutely essential that highly competent and fully empowered leadership be brought in urgently to lead the power industry from the dire straits it's in today. The political leadership in Islamabad must understand the following very clearly: Without first repairing the power sector, there can be no hope of fixing the economy and spur growth before the next elections.

Thursday, October 13, 2011

Goldman Sachs is often used as the poster child for some of the most egregious practices on Wall Street that are believed to have set off the current economic crisis now sweeping much of America and Europe. This sentiment was summarized in an article Matt Taibi wrote for Rolling Stone Magazine as follows: "The world's most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money."

Taibi's criticism of Goldman Sachs immediately drew charges of antisemitism from some American Jewish leaders. And as the "Occupy Wall Street" movement gathers momentum, similar charges are now flying against the protesters who are joining this movement. Some of the Jewish media outlets, like Yeshiva World News, are using video footage of individual protesters to editorialize the claim that “many Jews” are feeling a bit uncomfortable with the growing protests.

I, for one, do not believe that the protests are motivated by antisemitism, and such charges are a great disservice to ordinary middle class Americans who have been forced to take to the streets.

From what I can tell, "Occupy Wall Street" appears to be a genuine grass roots movement that stems from a sense of deep dissatisfaction with the way the majority of American politicians of both parties have aided and abetted in the misdeeds committed by the big Wall Street firms. Some of these misdeeds have been laid bare by a number of authors, including Michael Lewis most recently in his two books on the subject. The actions of Goldman Sachs and other big Wall Street firms have led to massive job losses, growing homelessness, and deep concerns among middle class Americans about their own future and the future of this country. A similar situation is now gripping Europe as well.

I think President Obama should seize this opportunity to tap into this anger and use it to push new legislation to bail out the middle class and put an end to the excesses committed by the big business including the Wall Street banks and their highly-paid executives.

Thanks to the dynamic economy under President Musharraf's rule, Pakistan created more jobs, graduated more people from schools and colleges, built a larger middle class and lifted more people out of poverty as percentage of its population than India in the last decade. And Pakistan has done so in spite of the huge challenges posed by the war in Afghanistan and a very violent insurgency at home.

The current PPP government summed up General Musharraf's accomplishments well when it signed a Memorandum of Understanding with the International Monetary Fund which said:

"Pakistan's economy witnessed a major economic transformation in the last decade. The country's real GDP increased from $60 billion to $170 billion, with per capita income rising from under $500 to over $1000 during 2000-07". It further acknowledged that "the volume of international trade increased from $20 billion to nearly $60 billion. The improved macroeconomic performance enabled Pakistan to re-enter the international capital markets in the mid-2000s. Large capital inflows financed the current account deficit and contributed to an increase in gross official reserves to $14.3 billion at end-June 2007. Buoyant output growth, low inflation, and the government's social policies contributed to a reduction in poverty and improvement in many social indicators". (see MEFP, November 20, 2008, Para 1)

Pre-Musharraf Decade:

Before the coup, Pakistan was approaching the end of what is now remembered as The Lost Decade of the 1990s when PPP's Benazir Bhutto and PML's Nawaz Sharif played musical chairs, while the economy stagnated and the people suffered.

Summing up the economic situation after the PPP-PML coalition took office in 2008, the Economist magazine in its June 12 issue summed it up as follows: "Before Mr Sharif was ousted in 1999, the two parties had presided over a decade of corruption and mismanagement. But since then, as the IMF remarked in a report in January, there has been a transformation. Pakistan attracted over $5 billion in foreign direct investment in the 2006-07 fiscal year, ten times the figure of 2000-01. The government's debt fell from 68% of GDP in 2003-04 to less than 55% in 2006-07, and its foreign-exchange reserves reached $16.4 billion as recently as in October." Please read "Pakistani Economy Returning to the Bad Old Days".

Criticisms of Musharraf Government:

Among the various criticisms of Musharraf's rule, there are two that particularly stand out:

1. Musharraf's Support For US War on Terror:

Musharraf has been heavily criticized for siding with the United States and angering the Taliban and their sympathizers who have been attacking and terrorizing Pakistani state and its people. As mightily as Pakistan has suffered at the hands of the Taliban and al Qaeda terrorists and their affiliates since 911, I do believe that Pakistanis would have been much worse off if Musharraf had not sided with the United States when asked after the worst terror attacks on US mainland. The consequences of refusal to help the US would have ranged from direct and massive NATO attack (probably with Indian help) on Pakistan to crippling sanctions and complete political and diplomatic isolation on the world stage.

2. Musharraf's Failure to Increase Energy Supply:

There was double digit annual growth in industrial production in Pakistan from 2000-2007, and the rising incomes and standards of living put pressure on energy supplies, particularly electricity. However, the situation was being managed to assure only short interruptions in supply to maintain and ration insufficient power generation capacity. For example, in June 2007, the power cuts in Pakistan lasted no more than 3 or 4 hours a day. Today, the situation is far worse with 10-12 hrs or more of load shedding every day, in spite of an stagnant economy.

It is becoming increasingly clear that it is the total absence of financial management, not just insufficient installed generating capacity, that is the crux of the worsening energy problems in Pakistan.

Riots have broken out as the Punjab, Pakistan's largest province, finds itself in the midst of the worst ever electricity crisis in the nation's history. The power shortfall has reached almost 9000 megawatts across the country, over half of the total demand of about 17000 MW.

Many public and private power producers have shut down their power plants due to the suspension of fuel supply by Pakistan State Oil, the state-owned oil company, according to a report in the Express Tribune. The oil company is demanding payment of Rs. 155 billion in outstanding dues from the power producers before resuming fuel supply.

Summary:

Musharraf era was the best era in terms of improving the lives of the ordinary folks in Pakistan since the Ayub-era in the 1960s. Strong economy helped create millions of new jobs and lifted millions out of poverty. Social indicators improved significantly and the the size of the middle class grew dramatically. So why is it that there are so many people who continue to condemn Musharraf?

I think Musharraf's critics can be divided in two categories:

1. Self-serving politicians and their supporters under their patronage who deny Musharraf's accomplishments because any admission of reality would be seen as a confession of their own incompetence.

2. Those who acknowledge Musharraf's economic legacy but would still prefer elected civilian government for ideological reasons. They are perfectly willing to sacrifice economic growth in the hope of hastening a better democratic future for Pakistan.

I, too, want to see a democratic Pakistan, but I strongly disagree with both the above categories. In my view, the best way to usher in genuine and successful democratic rule in any developing nation is to first unleash East and South East Asian style rapid economic growth and human development which were brought about by dictators like General Park Chung-hee of South Korea, Mahathir Mohammad of Malaysia and General Suharto of Indonesia. Each of these autocrats served long enough to bring their nations in to the modern industrial era and created a large urban middle class which is now sustaining democratic rule. Until such time as Pakistan has a well educated and politically empowered urban middle class making up more than half of its population, the electoral process will continue to result in patronage-based feudal democracy of the kind that exists today.

Tuesday, October 11, 2011

India led the world with an estimated one quarter (26%, up from about 20% in previous years) of all TB cases, and China and India combined accounted for 38% of the global cases in 2010, according to the World Health Organization 2011 report titled "Global Tuberculosis Control 2011". The top five countries with the largest number of reported cases in 2010 were India (2.0 million–2.5 million), China (0.9 million–1.2 million), South Africa (0.40 million–0.59 million), Indonesia (0.37 million–0.54 million) and Pakistan (0.33 million–0.48 million).

The good news the WHO report offers is that TB rates are dropping for the first time. The number of TB cases fell from a high of 9 million in 2005 to 8.8 million in 2010. TB deaths dropped from 1.8 million in 2003 to 1.4 million in 2010, and the death rate plummeted 40% from 1990 to 2010. Cure rates are high -- in 2009, 87% of people who had TB were cured, but the report also found that a third of likely TB cases are never notified, so it's not known if those people were diagnosed and treated.

A number of countries have shown that the extra focus on fighting the disease pays off. Kenya, Tanzania and Brazil have all seen TB rates decline in the last 10 to 20 years. China's progress has been substantial, with death rates dropping by almost 80% from 1990 to 2010. The frequency of TB was also cut in half in that time.

Beyond TB, infectious diseases like malaria and dengue fever continue to take a heavy toll in developing nations. Over the past two months, dengue fever has killed 202 people in Pakistan and another 12,000 have been infected, according to Pakistani health officials. India has reported about 28,500 cases of malaria and at least 10 deaths in New Delhi, Andhra Pradesh, Haryana and Mumbai cumulatively this year. In India's Gujarat State 8228 cases have been confirmed in the last few weeks.

Poverty, hunger, unsanitary or unsafe conditions and inadequate health care in South Asia's developing nations are exposing their citizens to high risk of a variety of diseases which may impact their intelligence. Every year, World Health Organization reports what it calls "Environmental Burden of Disease" in each country of the world in terms of disability adjusted life years (DALYs) per 1000 people and total number of deaths from diseases ranging from diarrhea and other infectious diseases to heart disease, road traffic injuries and different forms of cancer.

In the range of DALYs/1000 capita from 13 (lowest) to 289 (highest), WHO's latest data indicates that India is at 65 while Pakistan is slightly better at 58. In terms of total number of deaths per year from disease, India stands at 2.7 million deaths while Pakistani death toll is 318, 400 people. Among other South Asian nations, Afghanistan's DALYs/1000 is 255, Bangladesh 64 and Sri Lanka 61. By contrast, the DALYs/1000 figures are 14 for Singapore and 32 for China.

Published by the University of New Mexico and reported by Newsweek, new research shows that there is a link between lower IQs and prevalence of infectious diseases. Comparing data on national “disease burdens” (life years lost due to infectious diseases or DALYs) with average intelligence scores, the authors found a striking inverse correlation—around 67 percent. They also found that the cognitive ability is rising in some countries than in others, and IQ scores have risen as nations develop—a phenomenon known as the “Flynn effect.”

According to the UNM study's author Christopher Eppig and his colleagues, the human brain is the “most costly organ in the human body.” The Newsweek article adds that the "brainpower gobbles up close to 90 percent of a newborn’s energy. It stands to reason, then, that if something interferes with energy intake while the brain is growing, the impact could be serious and longlasting. And for vast swaths of the globe, the biggest threat to a child’s body—and hence brain—is parasitic infection. These illnesses threaten brain development in several ways. They can directly attack live tissue, which the body must then strain to replace. They can invade the digestive tract and block nutritional uptake. They can hijack the body’s cells for their own reproduction. And then there’s the energy diverted to the immune system to fight the infection. Out of all the parasites, the diarrheal ones may be the gravest threat—they can prevent the body from getting any nutrients at all".

Looking at the situation in South Asia, it appears from the WHO data that Pakistan is doing a bit better than India in 12 out of 14 disease groups ranging from diarrhea to heart disease to intentional injuries, and it is equal for the remaining two (Malaria and Asthma).

A detailed WHO report on World Health Statistics for 2010 assesses and compares its member nations on the basis of nine criteria including mortality and burden of disease, cause-specific mortality, selected infectious diseases, health service coverage, risk factors, health workforce-infrastructure, health expenditures and demographic and socioeconomic statistics. It shows that both India and Pakistan have some serious challenges to overcome to have any chance of meeting health-related Millennium Development Goals (MDGs 4, 5 and 6).

Sunday, October 9, 2011

Pakistan has created more jobs, graduated more people from schools and colleges, built a larger middle class and lifted more people out of poverty as percentage of its population than India in the last decade. And Pakistan has done so in spite of the huge challenges posed by the war in Afghanistan and a very violent insurgency at home.

Pakistan's employment growth has been the highest in South Asia region since 2000, followed by Nepal, Bangladesh, India, and Sri Lanka in that order, according to a recent World Bank report titled "More and Better Jobs in South Asia".

Total employment in South Asia (excluding Afghanistan and Bhutan) rose from 473 million in 2000 to 568 million in 2010, creating an average of just under 800,000 new jobs a month. In all countries except Maldives and Sri Lanka, the largest share of the employed are the low‐end self-employed.

Pakistan Graduated More People:

Although India has higher rates of literacy and enrollment than Pakistan, Pakistanis spend more time in schools and colleges and graduate at a higher rate than their Indian counterparts in 15+ age group, according to a report on educational achievement by Harvard University researchers Robert Barro and Jong-Wha Lee.

"Pakistan does well in one critical area — the drop-out rate in tertiary education. Those who complete tertiary education in Pakistan account for a larger proportion of persons who enter school at this level. The proportion is much higher for girls, another surprising finding for Pakistan."

Upon closer examination of Barro-Lee data on "Educational Attainment for Total Population, 1950-2010", it is clear that Pakistani students stay in schools and colleges longer to graduate at higher rates than Indian students at all levels--primary, secondary and tertiary. While India's completion rate at all levels is a dismal 22.9%, the comparable completion rate in Pakistan is 45.7%.

Here is a summary of Barro-Lee's 2010 data in percentage of 15+ age group students who have enrolled in and-or completed primary, secondary and tertiary education:

Education Level.......India........Pakistan

Primary (Total)........20.9..........21.8

Primary (Completed)....18.9..........19.3

Secondary(Total).......40.7..........34.6

Secondary(Completed)...0.9...........22.5

College(Total).........5.8...........5.5

College(Completed).....3.1...........3.9

Pakistan Has Larger Middle Class:

Over the last two decades, Pakistan has continued to offer much greater upward economic and social mobility to its citizens than neighboring India. Since 1990, Pakistan's middle class had expanded by 36.5% and India's by only 12.8%, according to an ADB report on Asia's rising middle class released recently.

An ADB report on Asia's rising middle class released this month confirms that Pakistan's middle class has grown to 40% of the population, significantly larger than the Indian middle class of about 25% of its population, and it has been growing faster than India's middle class. The other significant news reported by Wall Street Journal says the vast majority of what is defined as India's middle class is perched just above $2 a day, making it vulnerable to various shocks. This is also true of Pakistan.

Pakistan Has Less Hunger and Poverty:

In spite of recent poverty declines with its rapid economic expansion, India still has higher poverty rates than Pakistan, according to a 2011 World Bank report titled "Perspectives on poverty in India : stylized facts from survey data" released in 2011.

Based on hunger data collected from 2003 to 2008, IFPRI reported that Pakistan's hunger index score improved over the last three consecutive years reported since 2008 from 21.7 (2008) to 21.0 (2009) to 19.1 (2010) and its ranking rose from 61 to 58 to 52. During the same period, India's index score worsened from 23.7 to 23.9 to 24.1 and its ranking moved from 66 to 65 to 67 on a list of 84 nations.

Nominal per capita incomes in both India and Pakistan stand at just over $1200 a year, according to figures released in May and June of 2011 by the two governments. This translates to about $3100 per capita in terms of PPP (purchasing power parity). Using a more generous PPP correction factor of 2.9 for India as claimed by Economic Survey of India 2011 rather than the 2.5 estimated by IMF for both neighbors, the PPP GDP per capita for Indian and Pakistan work out to $3532 and $3135 respectively.

Nominal per capita income of Indians grew by 17.9 per cent to Rs 54,835, or $1218, in 2010-11 from Rs 46,492 in the year-ago period, according to the revised data released by the government in May, 2011 as reported by Indian media.

Pakistan Has Better Public Hygiene:

India has the worst public sanitation situation in the world today, according to a recent UNICEF survey. In terms of open defecation, India(638m) is followed by Indonesia (58m), China (50m), Ethiopia (49m), Pakistan (48m), Nigeria (33m) and Sudan (17m). In terms of percentage of each country's population resorting to the unhygienic practice, Ethiopia tops the list with 60%, followed by India 54%, Nepal 50%, Pakistan 28%, Indonesia 26%, and China 4%.

18 percent of urban India still defecates in open while the percentage of rural India is as high as 69 percent of the population. It is the key reason why India carries among the highest infectious disease burdens in the world.

To conclude, let me share with you an except from a piece written by Mudassar Mazhar Malik, an MIT (Sloan) and LSE (London) educated Pakistani economist and investment banker,on his assessment of Pakistan today:

"First, despite seven changes in government in the past twenty years, Pakistan has maintained an average growth rate of 5 percent per annum. Until recently, Pakistan was being touted as one of the most dramatic turn-around stories of the last decade. Driven by domestic demand and population growth, GDP growth averaged over 6% a year from 2003-2008. This translated into an investment and infrastructure led growth cycle cycle fueling expansion in the housing, health care, education, food, infrastructure, energy, telecommunications, IT and financial services sector. This has meant that Pakistan's economy has moved progressively from its traditional agricultural base to manufacturing and increasingly to services. In that sense, Pakistan's economic structure is closer to that of India and China, and is unlike many smaller Asian countries, which are more dependent on export growth."

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About Me

I am the Founder and President of PakAlumni Worldwide, a global social network for Pakistanis, South Asians and their friends. I also served as Chairman of the NEDians Convention 2007. In addition to being a South Asia watcher, an investor, business consultant and avid follower of the world financial markets, I have more than 25 years experience in the hi-tech industry. I have been on the faculties of Rutgers University and NED Engineering University and cofounded two high-tech startups, Cautella, Inc. and DynArray Corp and managed multi-million dollar P&Ls. I am a pioneer of the PC and mobile businesses and I have held senior management positions in hardware and software development of Intel’s microprocessor product line from 8086 to Pentium processors. My experience includes senior roles in marketing, engineering and business management. I was recognized as “Person of the Year” by PC Magazine for my contribution to 80386 program. I have an MS degree in Electrical engineering from the New Jersey Institute of Technology.
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